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News media information 202 / 418-0500
Fax-On-Demand 202 / 418-2830
Internet: http://www.fcc.gov
ftp.fcc.govPUBLIC
NOTICE
Federal Communications Commission
1919 M St., N.W.
Washington, D.C. 20554
Released: February 27, 1998
DA 98-413
CORRECTED VERSION
Proposed Second Quarter 1998 Universal
Service Contribution Factors Announced
CC Docket No: 96-45
By the Common Carrier Bureau:
In this Public Notice, the Common Carrier Bureau (Bureau) announces proposed universal
service contribution factors for the second quarter of 1998.
In the Universal Service Order released on May 8, 1997, the Commission established new
federal universal service support mechanisms consistent with the Communications Act of 1934, as
amended. The Commission required all telecommunications carriers that provide interstate
telecommunications services, providers of interstate telecommunications, and payphone service
providers to contribute to the federal universal service support mechanisms. The Commission
found that contributions for the schools, libraries, and rural health care support mechanisms
would be based on interstate, intrastate, and international end-user telecommunications revenues.
The Commission also found that contributions for the high cost, rural, and insular and low-income
support mechanisms would be based on interstate and international end-user telecommunications
revenues.
On July 18, 1997, the Commission released an Order directing the National Exchange
Carrier Association (NECA) to create an independently functioning not-for-profit subsidiary, the
Universal Service Administrative Company (USAC), through which it will administer
temporarily certain aspects of the federal universal service support mechanisms. The
Commission also directed NECA to create two independent, not-for-profit entities, Schools and
Libraries Corporation (SLC) and Rural Health Care Corporation (RHCC), to administer certain
aspects of the schools, libraries, and rural health care support mechanisms. The Commission
instructed USAC, SLC, and RHCC to submit projections of demand and administrative expenses
for their respective support mechanisms for each quarter to the Commission at least sixty days
before the start of each quarter. USAC also was required to compile total interstate, intrastate,
and international end-user telecommunications revenues and submit that information to the
Commission. The Commission stated that it would publish these figures and the proposed
quarterly contribution factors in a Public Notice.
In the Third Order on Reconsideration in CC Docket 96-45, the Commission set the
maximum amounts to be collected during the first six months of 1998 for the schools and libraries
and rural health care support mechanisms; $625 million for the schools and libraries support
mechanism and $50 million for the rural health care support mechanism. In a Public Notice, the
Commission projected that annual demand for the low income support mechanism should be
approximately $500 million and that quarterly demand should be $125 million.
On January 30, USAC, SLC, and RHCC submitted the following projections of second
quarter 1998 demand and administrative expenses:
($ millions)
Program
Program
Demand
Administrative
Expenses
Interest
Income
Total
Program
Costs
Schools and Libraries
322.4
4.4
(1.8)
325.0
Rural Health Care
23.2
1.9
(0.1)
25.0
Subtotal
345.6
6.3
(1.9)
350.0
High Cost
431.1
0.9
(0.9)
431.1
Low Income
122.3
0.4
(0.3)
122.4
Subtotal
553.4
1.3
(1.2)
553.5
TOTAL
899.0
7.6
(3.1)
903.5
Based on information contained in the Universal Service Worksheets, FCC Form 457,
USAC submitted end-user telecommunications revenues for the first half of 1997 on January 30,
1998. On February 24, 1998, USAC revised these revenue estimates to reflect newly-filed or
revised Form 457 submissions and to exclude revenues from contributors that the Commission
determined are exempt in its Fourth Order on Reconsideration. The revised amounts are as
follows:
Total Interstate, Intrastate, and International End-User Telecommunications
Revenues from January 1, 1997 - June 30, 1997: $92.1856 billion
Total Interstate and International End-User Telecommunications Revenues from January
1, 1997 - June 30, 1997: $35.3033 billion.
We estimate quarterly revenues by dividing the six-month revenue estimates listed above by two.
Based on the figures submitted by USAC, SLC, and RHC, the proposed contribution
factors for the second quarter of 1998 are as follows:
Contribution factor for the schools and libraries and rural health care support
mechanisms:
Total Program Costs / Contribution Base (Interstate, International, and Intrastate) =
$0.350 billion / ($92.1856 billion / 2) = 0.0076
Contribution factor for the high cost and low income support mechanisms:
Total Program Costs / Contribution Base (Interstate and International) =
$0.554 billion / ($35.3033 billion / 2) = 0.0314
These factors are the proposed second quarter 1998 universal service contribution factors.
If the Commission takes no action regarding these proposed factors by March 19, 1998, the
projections shall be deemed approved by the Commission and shall be used by USAC to
calculate second quarter universal service contributions.
For further information, contact Frances Downey, Universal Service Branch, Accounting
and Audits Division, Common Carrier Bureau, at (202) 418-7400.
-- Action by the Common Carrier Bureau --